The pioneering core development team at Bitcoin L2 Labs, the driving force behind Stacks, has just announced the successful mainnet launch of a programmable asset, sBTC, which is backed 1:1 by Bitcoin. This significant advancement follows on the heels of the Nakamoto Upgrade in October that brought quicker transactions and 100% Bitcoin finality to the Stacks network.
For the wider Bitcoin community, this is more than just a significant milestone: it signals the dawn of a new era in programmable Bitcoin. This development means that the world’s most secure blockchain can now actively participate in decentralized finance (DeFi).
sBTC, a new addition to the Stacks Mainnet, has been created to unlock the liquidity of Bitcoin (BTC). The Nakamoto Upgrade, initiated by Stacks in late August, paved the way for this development. Now, BTC holders can tap into DeFi opportunities while still enjoying the unmatched security features of Bitcoin.
This means that users can now participate in DeFi applications like lending and borrowing through protocols such as Zest, decentralized exchanges (DEXs) like Bitflow and ALEX, and even AI-powered tools like aiBTC.
Stacks founder Muneeb Ali explains, “Unlike locking BTC in proof-of-stake systems, sBTC is fully expressive and enables an on-chain Bitcoin economy. It can power decentralized lending, DEXs, AI bots, and more while inheriting 100% Bitcoin hash power security.”
sBTC has a host of key features, such as a 1:1 Bitcoin backing where each sBTC token is fully collateralized by the pioneer crypto. There is also an institutional signer network that reduces dependency on single entities, thereby increasing trust.
Other features include 100% Bitcoin finality, meaning sBTC is secured by Bitcoin hash power, ensuring robust security. Additionally, the open-source, transparent code of the product offers verifiability and transparency for users and developers.
However, the current mainnet phase only offers deposit-only functionality, capped at 1,000 BTC. Despite this limitation, the cap will provide initial liquidity for developers and enable further integrations with institutional custodians and ecosystem partners.
The press release states that withdrawals will only be available in Q1 2025 as the system transitions towards a fully open, permissionless signer set. Depositors will also earn annual rewards of up to 5% in sBTC for holding the asset, presenting a unique yield opportunity for Bitcoin holders.
sBTC’s launch is set to bring Bitcoin closer to Ethereum’s dominance in the DeFi space. While Ethereum boasts a total value locked (TVL) approaching $80 billion, Bitcoin is fast on its heels after flipping Binance Smart Chain (BSC).
The successful launch of sBTC lays the foundation for a more robust Bitcoin Layer-2 ecosystem. The gradual lifting of the BTC cap, the introduction of withdrawals, and the transition towards a permissionless signer network could drive further adoption.
Andre Serrano, Head of Product at Bitcoin L2 Labs, emphasizes, “With sBTC, Bitcoin becomes highly capable beyond a store of value, unlocking the full potential of BTC in decentralized applications.”
This development also opens up new opportunities for DeFi builders. For instance, Zest Protocol allows users to earn additional rewards while holding sBTC. As Bitcoin capital flows into DeFi protocols, builders, developers, and users will benefit from enhanced liquidity and innovative financial tools.
